IPO Report: Independence Realty Trust (IRT)

Francis Gaskins  |

Nine other IPOs were scheduled for the week of August 5. The full IPO calendar can be found at IPOpremium.

Independence Realty Trust ($IRT) is based in Philadelphia, PA.  IRT scheduled an $42 million IPO with a market capitalization of $101 million at a price range mid-point of $10.5, for the week of August 5, 2013.

IRT filed a S-11A  July 26, 2013.  The manager and joint managers are Ladenburg Thalmann; William Blair; JMP Securities; Compass Point.  The co-managers are: National Securities; Aegis Capital; C&Co-Prince Ridge; Drexel Hamilton.

Summary

IRT has 18 apartment buildings on Arizona, Colorado, Georgia, Indiana, Texas and Virginia with a total of two thousand units.

Valuation

Annualizing the Q1 '13 funds from operations of $1.3 suggests a maximum 5.2% dividend at the price range mid-point of $10.50, with no growth except rental increases, and perhaps some acquistions.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q1 '13

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Independence Realty Trust

$101

3.8

-3.2

1.2

n/a

42%

American Residential Properties (ARPI)

$569

32.1

-35.6

0.9

1.1

 
             

SCORECARD

 

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

   

Grwth

mination

tary

rating

20 is perfect

 

2

2

1

1

C+, 6

Glossary

Conclusion

Avoid IRT on the IPO.

To put the conclusions and observations in context, the following is reorganized, edited, and summarized from the full S-1 referenced above:

Business

IRT is an externally advised by a wholly-owned subsidiary of RAIT (RAS) , a REIT that invests primarily in commercial mortgages and, to a lesser extent, apartment properties.

As of July 26, 2013, IRT owns eight apartment properties containing an aggregate of 2,004 apartment units in Arizona, Colorado, Georgia, Indiana, Texas and Virginia.

5% stockholder, pre-IPO

RAIT Financial Trust , the 'parent', $609 million market capitalization

Use of proceeds

IRT expects to net $38 million from its IPO.

IPO proceeds will be contributed the operating partnership in exchange for units of the operating partnership. $3.6 million of the net proceeds will be used to redeem all of the Series A preferred stock and all of the Series B preferred units of the operating partnership.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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